Payable Accounting
Payable accounting is an accounting entry that very commonly used in day-to-day accounting systems. This entry happens while a firm buys either good or services or both on credit, which has to be paid back within a short period. It is usually entered as current liabilities. Payable accounting indicates that the firm is liable to make payments to the suppliers and other creditors.
Roles of Payable accounting
The main responsibility of Payable accounting goes beyond the mere functions of paying inward bills and invoices. It treats as a serious and different entity in major companies; however, in small firms, both the receivable tasks and accounts payable exists in a combined form.
It is obvious that the size and turn-over decide the accounts payable; it possesses three main functions apart from paying bills.
The process involved in Payable accounting functions
The accounts payable department, which deals with payable accounting has to undergo numerous systematic process before carrying out vendor payments. Guidelines are an essential part of this due to the value and volume of the transactions carried out in a specific period.
There are some processes associated with Payable accounts
Analyze details on bill:
While receiving the billion has to make sure that the bill contains the particular vendor’s name, the authorization details. Another major factor required is the date of the purchase order.
Making timely payment:
All payments should be processed before or at their due date on a bill, as agreed upon between a vendor and a purchasing company. Required documents need to be prepared and verified. Details entered on the check, vendor bank account details, payment vouchers, the original bill, and purchase order need to scrutinize. A managerial authorization might be required at this point too.
Record updates:
All the concerned records regarding the bills received should be updated. All might require at this stage with the approval hierarchy attached to the bill value.
Bill receipt:
A bill that is produced during the time of the purchase helps a firm to analyze the quantity of the item purchased and also the same bill notifies the time factors involved.
Ensure a company’s cash and assets are safe; the accounts payable process should have internal controls to:
prevent paying a fraudulent invoice
prevent paying an inaccurate invoice
prevent paying a vendor invoice twice
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